Natural Gas On MCX Settled Down -0.67%

Naturalgas on MCX settled down -0.67% at 208.60 for the second session in a row on Wednesday, as updated weather forecasting models points to weaker demand for the fuel. The latest U.S. weather model called for mild temperatures over the next two weeks, which should reduce demand during that time. 

Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on spring heating demand. Meanwhile another spring storm will track across the east-central and southern US the next few days with heavy showers, reaching the East Thu-Fri.

Temperatures behind the cool front will drop 8-20F below normal driving late season demand for heating. High pressure will build into the southern and eastern US this weekend with temperatures warming back into the 80s and 90s, although cooling right back off next week. A weather system into the NW has brought cooling, while the SW remains very warm with 80s to 100s. Overall, nat gas demand remains slightly stronger than normal.

Last week’s report from the US EIA showed working gas in storage was 2,369 Bcf as of May 12th, a net increase of 68 Bcf from the previous week, which was above consensus estimates of a build of roughly 61 Bcf. While tonight the EIA's next storage report due which is expected to show a build in a range between 59 and 69bcf in the week ended May 19. 

That compares with a gain of 68bcf in the preceding week, an increase of 71 billion a year earlier and a five-year average rise of 90bcf. Technically market is getting support at 206 and below same could see a test of 203.3 level, And resistance is now likely to be seen at 211, a move above could see prices testing 213.3.

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Suhani Verma

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